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Note 21. Subsequent Events
12 Months Ended
Feb. 02, 2013
Subsequent Events [Text Block]
21.          Subsequent events

Sale of development project

On March 8, 2013, the Company entered into an Asset Purchase Agreement with a third party (the “Buyer”) to sell certain development projects (intellectual property) and long-lived assets (the “Connectivity Assets”) related to the connectivity technology over coaxial cable market, including the transfer of 21 employees (the “Connectivity Employees”) to the Buyer. The aggregate carrying amount of the Connectivity Assets is $0.6 million at February 2, 2013, which mainly consist of computer and testing equipment with a carrying value of $0.1 million and software licenses (design tools) with a carrying value of $0.5 million. The Connectivity Assets have been classified as held for sale and included within prepaid expenses and other current assets in the accompanying consolidated balance sheet at February 2, 2013. Due to the net book value of such assets approximating their fair value as of the measurement date (January 31, 2013), adjustments to their net book value were not material. Under the Asset Purchase Agreement, the maximum consideration from the sale is $8.0 million comprised of the closing consideration of $2.0 million in cash and the contingent earn-outs consideration of $6.0 million in cash. The closing consideration was due and payable upon closing of the Asset Purchase Agreement, which ocurred in the first quarter of fiscal 2014. The earn-outs consideration is due and payable as follows: (i) $2.0 million in cash 30 days after Buyer’s confirmation of achievement of the First Technical Milestone, as defined in the Asset Purchase Agreement, and (ii) $4.0 million in cash 30 days after Buyer’s confirmation of achievement of the Second Technical Milestone, as defined in the Asset Purchase Agreement. There can be no assurance that either of the technical milestones will be achieved. In connection with the Asset Purchase Agreement, the Buyer reimbursed us for payroll expenses related to the employees transferred to the Buyer for the period from February 1, 2013 through the actual payroll transfer, totaling $0.6 million.

Departure of Officer

On March 4, 2013, Thomas E. Gay resigned as Chief Financial Officer of the Company. Mr. Gay agreed to remain with the Company until April 4, 2013 (the "Separation Date") to assist with transitional matters. The Company entered into a Separation Agreement with Mr. Gay that provides, among other things, that in exchange for a general release of claims against the Company, Mr. Gay will receive a lump sum payment equal to two months of base salary less applicable payroll withholding, all equity awards held by Mr. Gay will be accelerated such that all equity that would have otherwise been vested as of December 31, 2013 will be vested at the Separation Date and the Company will continue to pay the share of Mr. Gay's health and dental insurance premiums that it paid when Mr. Gay was an active employee for up to an additional two months following the Separation Date. The separation payments are due upon Mr. Gay's satisfactory completion of the transition period. The acceleration of Mr. Gay's equity awards will effectively result in the acceleration of 6,588 shares of common stock underlying outstanding restricted stock awards. In addition, Mr. Gay has agreed to remain available to consult with the Company on a project by project basis on terms to be negotiated by the parties. Mr. Elias N. Nader, Corporate Controller, has agreed to serve as interim Chief Financial Officer.

Legal proceedings

In March 2013, we filed a motion to intervene in (and become a party to) U.S. Ethernet Innovations, LLC (USEI) v. AT&T Mobility, LLC (“AT&T”) and others, Case No. 5-10-cv-05254 CW, currently pending in the U.S. District Court for the Northern District of California, or the Litigation. In this Litigation, USEI filed a patent infringement complaint alleging that various AT&T products infringe USEI patents that have now expired, including alleging that set-boxes deployed by AT&T that contain our SoCs infringe a USEI patent.  USEI has made similar allegations that other defendants infringe this and other now expired USEI patents in this Litigation and other related cases.  Further, other intervenors have already been added to this Litigation and other related cases.  USEI seeks monetary damages, attorney’s fees, and an injunction against AT&T, other defendants and other intervenors.  AT&T, other defendants and other intervenors have denied the allegations of infringement made by USEI and asserted that USEI’s patents are invalid, unenforceable, and not infringed.  While approval from the Court to our motion to intervene is pending, USEI has indicated that it will not oppose our intervention as long as it can assert other claims that it may have against us.  The trial date for the Litigation has been set for January 5, 2015.